New data from an industry association has revealed that one in three Australian organisations admit to making employee payment mistakes every pay run.
The clincher? The CEO and CFO never know about it.
The revelation comes as retailers MJ Bale, Michael Hill and Super Retail Group grapple with staff underpayment issues.
The Australian Payroll Association surveyed 601 payroll managers across the country’s big and small businesses, and across myriad industries.
Across 45% of organisations, it’s the employees who alert managers to the errors and in 32% of instances, the CFO and CEO are not told about the errors.
The research found that of the 33% of payroll managers admit to making employee payment or entitlement blunders at least once a month, and a further 21% admitted to making mistakes every quarter.
Surprisingly, across 45% of these organisations, the employees are the first to alert the organisation about the mistake. In 32% of these organisations, the CEO, CFO or equivalent are not told about the payment errors.
The bigger the organisation, the more mistakes made
The survey also revealed that the bigger the organisation, the higher the rate of mistakes across employee pay and entitlements.
Some 69% of organisations with more than 10,000 employees made errors at least every month.
This is compared with 55% of organisations with 1001-5000 employees, 45% of organisations with 500-1000 employees and 24% of those with 201-500 employees.
Meanwhile it only occured in 21% of those with 51-200 employees, and just 16% of businesses with up to 50 employees.
CEOs and CFOs are less likely to be privy to these mistakes in larger organisations.
In 49% of companies with more than 1000 employees, CEOs and CFOs are not told about employee payment errors.
In companies with 200 or fewer employees, just 18% of CEOs, CFOs or the equivalent are not told about the errors.
On the other hand, smaller companies had a higher incidence of late payments and delayed superannuation contributions.
One in five of micro-businesses ( one -10 employees) made late salary payments compared with just 11% of large organisations with more than 1000 employees.
Some 22% of micro-businesses also admitted to paying superannuation contributions late compared with just 3% of organisations with more than 1000 employees.
Despite a recent spate of payment scandals in the sector, retail is not the leading offender with healthcare organisations having the most frequent errors.
Australian Payroll Association CEO Tracy Angwin said there are solutions to the problem.
“With more companies facing employee underpayment scandals it has become crucial for organisations to minimise the incidence of payroll errors.
"Accurate pay and entitlements involve making not only the correct pay and award calculations, but accurate leave entitlements and superannuation contributions within the correct timeframe.
"When payment mistakes occur, companies need to be transparent not only with the employee but with their superiors so that the errors can be corrected, and steps taken to avoid them in the future.
“While our data found that most of these payment inaccuracies were discovered by payroll personnel a large portion were only alerted to these errors when the affected employee flagged it as an issue.
"Companies can mitigate the risk of widespread payroll miscalculations by ensuring payroll staff are adequately trained or by using a specialist external payroll advisor."